7 grant tracking changes that’ll make a big difference to your mission

Nonprofits operate in a rapidly changing, unpredictable world.

It is important to maintain financial resilience to adapt to changing funding conditions and respond to new needs that arise in your mission.

Grants from foundations, public and government agencies, and other grant-making institutions offer a significant and potentially renewable source of funding that can secure your organization’s financial health.

Unlike loans, grants do not require repayment.

Grant funding has become an essential part of many nonprofits’ strategic funding plans.

In the 2024 Nonprofit Technology Trends report, nonprofit finance leaders reported their biggest increase in funding this year came from government funding, followed by foundation grants.

With greater grant funding comes greater accountability, compliance, and transparency.

To earn renewals and win new grants, you need to be able to meet every grant requirement and restriction.

In this article, we will introduce seven changes to grant tracking that nonprofits can implement to impress grantors and earn the grants needed to advance mission impact.

Here’s what we’ll cover

7 grant tracking changes that support greater mission impact

Nonprofits can increase success with grant funding by streamlining grant management workflows and incorporating best practices that lead to grant renewals.

Here are seven grant tracking changes you can make using technology to automate and streamline your grant management process.

1. Understand the grant and all of your grantor’s requirements.

Your accounting team should never find out about a new grant because they’ve received the first payment.

Instead, you will want to centralize all information about a grant in your nonprofit financial management system as soon as it is awarded.

The development and finance teams should work together at the start of a new grant, and giving both teams access to cloud-based grant tracking capabilities within your nonprofit accounting system is a best practice that streamlines this workflow.

It is essential that you understand the amount of the grant, what date it begins and ends/renews, grantor contacts, who is managing the grant within your organization, and business rules governing the grant including reporting requirements, audit requirements, and cost principles.

Your grant records should include any details unique to your program delivery.

Sage Intacct Grants Tracking and Billing helps nonprofits manage grants efficiently and accurately while ensuring compliance with grantor requirements.

It centralizes grant records and reports, making it easy to track the tasks and expenses associated with each grant.

2. Ensure compliance with donor restrictions

A number of grants are accompanied by substantial grantor limitations, outlining the usage, timing, and scope of the granted funds.

Furthermore, most grants have specifications relating to transparency, reporting, and audits.

Government federal awards adhere to the Uniform Guidance for grant stipulations, encompassing cost principles and audit criteria.

While foundations and corporations may have less rigorous requirements, there will still likely be guidelines regarding approved budgetary expenses and reporting obligations.

You need to handle restricted funds with care—spending funds on disallowed activities or before restrictions have lifted can risk losing the grant renewal.

Your team needs a way to quickly view the restrictions on each grant. Spreadsheets invite error.

The best practice is having your nonprofit accounting solution track restrictions and automatically record when funds become available.

3. Stay on top of revenue, spending, and budgets

Throughout the grant period, nonprofits need to monitor expenses, budget, and cash flow carefully.

Most grants reimburse expenditures rather than provide payment upfront.

If you don’t track spending against budget and timing of purchases against restricted funds, you could end up overspending.

You also need to make sure expenses will qualify for reimbursement.

Given these constraints, it is easy to understand why having real-time visibility into revenue, spending, and budgets is so essential.

Modern, cloud-based nonprofit accounting solutions enable you to see grant revenues and expenses in real-time, from anywhere in the world.

This will help your organization stay within budget and perform well financially.

4. Capture accurate costs and report for timely reimbursement

When tracking costs for reimbursement, you don’t want to accidentally overstate the amount of an expense. Nor do you want to lose track of expenses and miss out on reimbursement.

Accuracy is critical. And for the sake of efficiency, automation is essential.

Your nonprofit accounting system should be doing the heavy lifting in this area.

For example, in Sage Intacct, the accounting team can associate entries with grants and flag reimbursable costs at entry to reduce billing errors.

It effortlessly gathers eligible charges for reporting and billing. Users can bill indirect costs based on negotiated rate, specific rate, or markup based on the type of expense.

With most grants, you will also bill your employees’ time against grant funds. It is important to ensure accuracy when capturing time spent on grant-supported activities.

One best practice is using an integrated timekeeping system to relay data directly to your accounting solution.

If that isn’t possible, then track time and approvals directly within the accounting system for accurate reporting and billing.

5. Improve visibility with dashboards and Key Performance Indicators (KPIs)

Winning grants and earning renewals takes teamwork—and shared access to measures of financial performance and mission outcomes.

Therefore, nonprofits will want to track and report on Key Performance Indicators (KPIs) such as:

• How many grants do we have?
• What is the total value of grant funding?
• How does grant funding break out by source?
• What is the amount and age of receivables?
• How much of the grant budget has been spent?

Role-based dashboards can be customized to an individual’s responsibilities within the organization.

Dashboards gather the most relevant KPIs and reports in one place. This makes it easy to check in each morning or throughout the day to make sure everything related to grant funding (or other areas of responsibility) stays on track.

6. Automate reporting to grantors

Supplying grantors with the reports they require is critical to demonstrating accountability and earning grant renewals.

Nonprofits need to establish a workflow for producing accurate reports in a timely manner.

When grantors have additional questions, they also need to be able to quickly perform ad hoc reporting to answer.

If your organization is relying on spreadsheets for reporting, it can take a lot of time and effort—and too often, reports include errors.

Fortunately, cloud accounting and grant tracking solutions can automate report preparation. This will enable your team to easily slice and dice data to answer ad hoc questions.

7. Earn a clean audit opinion

Along with regular reporting and maintaining a great relationship with grantors, nonprofits gain additional credibility and transparency through outside audits.

A clean audit opinion helps establish trust with board members, grantors, and other donors.

In fact, many grantors require an audit. Thus, obtaining an audit can be costly.

However, there are many ways nonprofits can use best practices to increase efficiency for the audit and lower costs.

The audit process can be streamlined with cloud nonprofit accounting software.

If your system allows it, you can grant secure, role-based read-only access to your auditor, allowing them to find reports quickly and drill down on transaction details without having to stop and circle back to your team.

Within Sage Intacct, you can set up a dashboard for your auditor that pulls together the most-requested reports and answer auditor questions using Sage Intacct Collaborate while the system keeps records of each interaction.

Final thoughts

As grants from foundations, government agencies, and corporations make up a large and growing share of nonprofit funding, organizations need to ensure they have every helpful tool and best practice in place for tracking and managing grants well.

This will help ensure they can earn new and bigger grants, as well as earn grant renewals for sustainable revenue.

The right technology–including a cloud accounting solution built around nonprofit best practices—adds efficiency and accuracy to grant tracking and management.

Download the 7 Proven Grant Management Best Practices for Growing Nonprofit Funding e-book for more details about how to set up grant tracking and management processes for success.

About the author

Nancy Master

Nancy Master is a senior nonprofit industry marketing manager at Sage Intacct and is passionate about helping nonprofits achieve mission success.

Nancy has more than 15 years of experience in software marketing and close to 20 years of experience working with a human services nonprofit organization.